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Obama: New Law Should Require 'Plain Vanilla' Credit Cards

President Obama, in remarks just released from the White House following his summit with top credit card issuers, laid out his four principles for reform of the credit card industry, pushing for simplification and an end to high fees.

One of the principles involves Congress quickly passing a law that requires credit card companies to issue what sounds like a Credit Card for Dummies.

"Every credit card issuer has to issue a plain vanilla easy-to-understand, simplest possible credit card that would be the default credit card that the average user can feel comfortable with," the president said.

His four proposals:

-- "Strong and reliable consumer protections," Obama said, meaning and end to the "any time, any reason rate-hikes" and "late-fee traps."

-- "All fees have to be written in plain language and plain sight," he said. "No more fine print." Knowing how much fine print there is on an average credit card contract/bill, one can anticipate 100-page credit card bills, if issuers have to increase the size of the type.

-- Consumers have to be able to comparison-shop among credit cards, meaning each issuer must plainly list their terms online. Here's a site that does that already: This is where Obama proposed his "plain vanilla" credit card requirement.

-- More effective oversight and enforcement of laws governing the credit card industry.

Obama said the credit card industry has been "out of balance;" presumably tipped toward the issuers, and the government needs to "create a new equilibrium." He said credit card companies should be able to earn a "reasonable" profit. Which, of course, is a loaded word.

Far be it from The Ticker to suggest that people a) read their credit card agreements b) don't run up massive debts to trigger higher interest rates and c) otherwise live within their means.

Here are the credit card company executives who met with Obama today:

-- David Bohne, president, USAA Savings Bank, USAA.
-- Patrick Burke, senior vice president and chief operations officer, HSBC card and retail services.
-- Paul Galant, chief executive, N.A. Cards, Citi.
-- Pamela Joseph, vice chairman, payments, US Bancorp.
-- Christopher McWilton, president, U.S. markets, MasterCard Worldwide.
-- David Nelms, chief executive, Discover Financial Services.
-- Kevin Rhein, division president, Wells Fargo card services and consumer lending, Wells Fargo and Company.
-- Ryan Schneider, president of cards, Capital One Financial Corp.
-- Lawrence Sharnak, executive vice president and general manager, consumer cards, American Express.
-- William Sheedy, global head of strategy, VISA U.S.A., Inc.
-- Gordon Smith, chief executive, Chase Card services, J.P. Morgan Chase & Co.
-- Richard Struthers, president, global card services, Bank of America.
-- Lloyd Wirshba, chief executive, Barclaycard US.
-- Edward L. Yingling, American Bankers Association.

-- Frank Ahrens
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By Frank Ahrens  |  April 23, 2009; 2:44 PM ET
Categories:  The Ticker  | Tags: Bank of America, Citi, Obama, USAA, Wells Fargo, credit cards  
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I read my credit card agreements, and all the changes/updates sent to me. That doesn't stop the CC companies from changing (raising) the interest rate on balances accrued under an earlier (lower) interest rate. I have paid my balance in full each month, which must mean I'm not a profit center for one of my CC companies; they cut my "available funds" amount in half on the basis that I don't spend my full available balance, and their action affects my credit rating.

When I did run a balance on my credit card, those CC companies using the two-month calculation method charged interest on money already paid to them. What other creditors can charge interest on principal already repaid?

One of my credit card companies recently raised its rate on cash balances to prime rate PLUS 16.2%, but no less than 21% at any time - does usery ring a bell?

Posted by: vklip | April 23, 2009 3:10 PM | Report abuse

Make The Plain Vanilla Credit Card A USACCC

Look, why should banks make a double profit from American taxpayers? Set up two categories of credit cards, public, ot plain vanilla, (A USA Citizen Credit Card) and private (The legal usury system we now have). The profit from the USACCC can go back to the treasury and be targeted at paying down our debt.

The country needs the money from credit card profits to stay strong, the banks want it to benefit themselves and other Haves. The profit from the Legal Bank Usury System (LBUS, aka, Visa, MasterCard, etc) can continue to go into private hands.

Now this may sound like a radical solution, but think about it. Who knows what legal income a person is reporting for sure? Who has a right to know this? Who can get money from people who don't pay well at least once a year (Income tax refunds)? Who can fairly assess how much credit card debt a person can handle? Who should we trust banks or the Federal goverment to give Americans a fair deal in the use of what is almost an indispensable financial tool?

I say, trust government over the banks! Make the plain vanilla card a USA American Citizen Credit Card (USACCC)!

Posted by: youngo47 | April 23, 2009 4:36 PM | Report abuse

Since I pay my balance every month on time, and over a course of 45 years of credit card use have rarely, if ever, carried a balance that wasn't paid off in two or three months....why do I have such little sympathy for all the people complaining to Congress???

All you need to do is listen to one or two Suze Orman, Dave Ramsey, or Carmen Ulrich shows and gauge what Americans --- for the most part --- use credit for: cars they can't afford, plastic surgery, expensive vacations, jewelry, collectibles, the list goes on and on.

Credit cards are a tremendous risk for the issuer since the debt is unsecured.

Americans need to quit whining and cut up their cards. Sometimes I think the country was settled with brave pioneers who have seen their bloodline diminished to the point that, outside of our military, we have a country of babies looking to Mr. Government to be the parents.

Grow up!

Posted by: Curmudgeon10 | April 23, 2009 4:41 PM | Report abuse

I too make a point of paying our balance in full every month on our main card. That bank seems to like us just fine. I do carry another card - one I've held for literally *decades* - that I use when I occasionally need to carry an expense over several months. The bank decided, just last month, to raise the interest rate on that card (on which I do have a balance). The new rate would presumably affect that balance as well. Oh, I could opt out of the increase - as long as I never use the card again. This is after decades of responsible use, and as interest rates everywhere else are DECLINING. Needless to say, this bank has lost me as a customer.

Posted by: mgoldenber001 | April 23, 2009 5:54 PM | Report abuse

I have been a responsible cardholder for years, but that didn't stop one company from slashing my credit limit by 35% and another from doubling the interest rate on the existing balance. I paid the balances down to the amount that yields the minimum monthly finance charge. I use the card to pay one major vendor each month who enjoys a small merchant account discount. And I make sure the credit card company sends me the bills by U.S. Mail. I also send the payments by mail now, instead of online. Maintaining that minimal balance month to month costs me under ten bucks a year, and the credit card company is guaranteed to LOSE money on my account while I follow their rules. It's called payback.

Posted by: calvin2 | April 23, 2009 6:36 PM | Report abuse

Curmudgeon: Since when does a group of respondents on "Suze Orman, Dave Ramsey, or Carmen Ulrich shows" (who have a clear self-selection bias) constitute a believably random sample to "gauge what Americans" use credit for?

Having seen my own credit card rate raised to 21%, even though I pay the balance off every month, and having seen my husband's credit limit cut in half, then dropped successively over the next 3 months, even though he has a spotless 30-yr credit history, I'm not inclined to quit my "whining" any time soon.

Posted by: acomment | April 24, 2009 1:43 AM | Report abuse

Yeah, great idea.
Let's get more credit cards out there to all the Obama-voting dolts who abused them in the first place.

Posted by: LiberalismEquals911 | April 24, 2009 9:00 AM | Report abuse

As long as credit card issuers can unduly influence your access to credit by manipulating your credit report, they'll be able to effectively manipulate the system so they win.
One example: jack up the interest rate on your credit card so you cancel your card -> thereby reducing your credit line -> increasing your debt load -> decreasing your credit score -> reducing your access to low rate mortgage refinancing. This way, they can profit on both ends.

Posted by: karlbe | April 24, 2009 10:50 AM | Report abuse

Strange - card issuers have just enough time to position (protect) their financial interest. Raising fees, interest rate polices and in many cases reducing and/or dropping credit lines. On the other hand, the customer (tax payers) provide funding to help banks to survive. In return, the banks express their deep appreciation by ignoring and in many cases financially brutalize those who need help to survive - now.

Posted by: larada | April 24, 2009 5:33 PM | Report abuse

What would be very interesting to see reported in the next few months would be the number of credit card accounts that have been closed due to the American consumer "opting-out" of having their interest rate being jacked-up due to the stupidity of the major credit card banks!

Posted by: cowboyjohn57 | April 26, 2009 9:35 PM | Report abuse

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